Why healthy Board-CEO relationships are vital for hospitals. Dr Shravan Subramanyam, CEO – GE Healthcare India and South Asia MD – Wipro-GE Healthcare, gives an insight
The board of directors in a hospital or any organisation exists so that it can hold the CEO accountable for performance. The primary role of a board is to hire a CEO and, if required, discontinue their services if targets aren’t reached. The board essentially has only one employee – the CEO – and the latter must report to only one employer – the board. The relationship between the two parties is extremely complicated. While the hospital Board and the CEO are tactical partners working together towards a common vision, they also share a relationship of an employer and employee. And for any hospital or healthcare reforms to take place, it is critical to have a healthy and honest CEO-board partnership.
Power partners
While the board does employ the CEO, it is essential to recognise the CEO as a strategic partner. Often, the CEO of a hospital, usually a senior physician, is more up to speed about the hospital business and the markets around it than the board members who come from diverse sectors. So even while keeping accountability, the board needs to give the CEO free rein in certain matters. What happens if this board-CEO equation is made mutually accountable? This reciprocity, or mutual openness, only stands to benefit the CEO, the board and, eventually, the organisation. Both parties should simultaneously be facilitators and force multipliers.
A study published in the Healthcare Management Review explored changes in the relationships between the CEO and the board, reviewing 90 California hospitals during the late 1980s. It found that constructive participation of both partners proved to be an effective governance mechanism, improving the hospital’s performance.
How? By reciprocal accountability
Mutual accountability and open communication require shared regard and support between the board and the CEO. This symbiotic relationship cannot be prescribed in any job description or HR handbook. It must be earned over time.
Trust is an essential pre-requisite. A CEO should feel that the board truly has his or her back and the board should have faith in the CEO’s abilities and vision to drive the organisation forward devoid of self-interest. But this mutual trust does not come easy and entails a substantial level of honesty and openness on everyone’s part. It is confidence at the highest level that helps companies succeed. At the Global Leadership Summit 2021, Leadership Consultant Patrick Lencioni shed more light on this, saying, “The only way to build trust is to overcome our need for invulnerability… teamwork begins by building trust.”
Trust between the board and the CEO only develops from working in close coordination in the troughs of the hospital boardroom. This is exemplified by common regard and discussion. It grows when collective views or interests are geared towards a shared purpose.
Being open to diverse ideas
In recent years, it is physicians who have been taking up CEO or top management positions at hospitals. This is bound to improve clinical outcomes and improve healthcare delivery. However, a chunk of hospital work involves financial planning, compliance, and strategy building. Elected boards have members from diverse ranges of skills, expertise, and perspectives. Taking advantage of this diversity can complement one’s knowledge and help build a stronger company. Leadership guru Brene Brown puts it best: “Only when diverse perspectives are included, respected, and valued can we start to get a full picture of the world.”
It is in the hospital’s best interests for the CEO to willingly seek advice from the board. Forming informal relationships with the board outside of official meetings sometimes helps establish an open, professional environment. These casual engagements often touch upon matters that lie outside the formal agenda.
Effective engagement in succession planning
Turmoil in a hospital setting often stems from changes at the top. The exit of a hospital CEO can sometimes disrupt operations, particularly when the leader departs without handing over the baton to a successor. Most healthcare set-ups need clear indications regarding the successor, especially as the business is both brisk and complex. Despite the established need for succession planning, most hospital boards push this agenda to the backburner. A 2019 survey conducted by American Hospital Association Trustee Services showed that 49 per cent of hospitals and healthcare boards lacked a formal CEO progression plan.
A candid discussion between the board and the CEO on prospects goes on to instil confidence in the leadership. It showcases both parties’ willingness to remain invested in the organisation’s success. Recognising each other as strategic partners, sharing goals and receptivity towards learning is crucial to nurturing competent CEO-board partnerships. An exchange built on trust, openness and mutual accountability are what will enable effective hospital governance in the current environment of change.
References
The Unique Relationship Between CEO and the Board (wsu.edu)
Essential Elements of an Effective CEO-Board Relationship
Russell Reynolds Associates
The Board – CEO relationship –
Forde Advisory
4 Best Practices for Hospital CEO-Board Relationships
(beckershospitalreview.com)
Every Hospital Board Needs a
CEO Succession Plan. Half Are
Failing. | HealthLeaders Media
